COMM 210 Lecture Notes - Lecture 1: Unbridled
13 Jul 2017
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Document Summary
Successful firms capitalize on economies of scale and scope; they have a functional management structure and invest in research and development and grow from related diversification. This will allow them to stay ahead of competition. Economies of scale: doing things at a bigger scale reduces costs. Economies of scope: use the same raw materials to produce various products. Managerial enterprise: making necessary investments in management, production and distribution in order to capitalize in economies of scale and scope. Research and development: new technologies, improving quality (innovation) Management hierarchy: separation of upper and lower level management. Claim: large-scale investments in production, distribution, and management are essential for companies to fully benefit from economies of scale and scope. Business firms should invest in managerial enterprise, related diversification and innovation (research and development) in order to become and remain a successful competitor in their respective markets. Economies of scale: the cost of production per unit drops as the volume of production (output) rises.
